This post was written by jd on March 3, 2010
Posted Under: Real Estate

As i mentioned in a recent article, China’s real estate is super hot and may be ready to collapse, well, it looks like Hong Kong and Singapore are in the same boat. Home prices in Hong Kong have risen 25 percent and land prices have doubled. Singapore’s government has stated that because of low interest rates, it is fearful that they may be getting into an overheated real estate market and are going to increase the housing market.

“Strong results in a Hong Kong government land auction are the latest sign that the city’s real-estate market is surging higher after a brief lull, as government officials here and elsewhere in the region grapple with how to cool off overheating property prices.

Around the region, easy credit and ample liquidity is fueling fears that real-estate prices may be rising to irrational levels.

Unlike China and Singapore, however, Hong Kong has little control over interest rates because its currency board system, which pegs the local currency to the U.S. dollar, forces it to import U.S. monetary policy.

“Hong Kong property buyers have been in a prolonged low-interest-rate environment, and now they’re behaving like drunken drivers on the road—they don’t think about consequences,” Ms. Wong says, estimating that prices have increased 5% this year. While speculative activity has been subdued, she argues the public is “overstretching” itself, convinced that “prices will go up forever.”